AT&T, Sprint Battle May Go Into Extra Innings

AT&T's battle to take over T-Mobile has moved across town, from the the U.S. District Court to Capitol Hill, where Sprint -- the carrier that has the most to lose -- is launching an advertising and lobbying campaign to preserve its unexpected late-game advantage over powerhouse AT&T.

Sprint threw the first pitch yesterday, with a lawsuit

 challenging the merger and echoing the Justice Department's arguments. It followed up today with full-page ads in The Washington Post and other inside-the-Beltway publications, reminding lawmakers that if the AT&T/T-Mobile merger is approved, AT&T and Verizon will control 77.6% of the wireless market in the United States. 

Easy-to-read icons compare that to the market share of the two leaders in other industries -- 18% in oil, 36.3% in airlines, 27.5% in banking, and so on.

AT&T is far from conceding, however.  Its general counsel, Wayne Watts, has been telling reporters the company will "vigorously contest" the Justice Department's suit.

A surprise

Last month's Justice Department lawsuit to block the $39 billion deal came as a surprise to nearly everyone.  AT&T, which has already absorbed most of the independent Bell companies created by the historic 1982 AT&T break-up, has accumulated more experience in the care, feeding and lobbying of regulators and legislators than the rest of the telecommunications industry combined.

AT&T boosted its spending on lobbyists by 30% to $11.7 million in the first six months of the year, Bloomberg News reported, but lobbyists aren't much help in the courtroom. Its PAC gave $805,000 to federal candidates, more than any other company, according to the Center for Responsive Politics.

Lobbyists are plenty helpful on the Hill though, and Congress is back in town so AT&T and Sprint may have to go into extra innings.

Lots at stake

There's a lot riding on the outcome.  If AT&T loses -- which seems almost impossible to those who've been around the track a few times -- it will not only lose the market share, bandwidth and customer accounts the T-Mobile deal would bring, it will also have to pay T-Mobile owner Deutsche Telekom a $3 billion fee and surrender some spectrum space to T-Mobile.

Consumers have a lot at stake as well, although none of the options are exactly overwhelmingly favorable:

• a combined AT&T/T-Mobile might improve service in rural areas, but then again it might not;
• Sprint would be severely weakened by an AT&T/T-Mobile lash-up which is most likely bad news for its customers;
• rejecting the merger preserves the status quo, which is hardly ideal.

Might it be better if Sprint bought T-Mobile? you ask.  Maybe, but it might also be better if the sun rose in the West tomorrow. The question is so hypothetical it's almost not worth discussing.  

For now, consumers are probably best advised to react with extreme skepticism to anything anyone says.  About anything.